Why is Documenting Underperformance Important?
When an employee challenges a dismissal on the grounds of poor performance, the dispute often centres on the circumstances surrounding the dismissal, the evidence available, and whether the employer followed a fair and reasonable process. A manager’s recollection of “many conversations” is thin evidence against an employee’s denial. However, written documents like a dated email, a signed improvement plan and a note of the employee’s own response are not.
Just last year, the Fair Work Commission’s decision in Galway v Vivin Imports Pty Ltd [2025] FWC 3277 shows what happens when the employers don’t correctly document underperformance. In Galway, a sales manager’s results fell well below target, and the Commission accepted that this was a valid reason for dismissal. However, the employer had given him no formal warning, had never told him his job was at risk, had not put him on an improvement plan and had not asked for his response. A director simply telephoned to end his employment. The Commission found the dismissal unfair, describing the call as perfunctory, and ordered the employer to pay $25,380 in compensation. The employee was genuinely underperforming, however the employer still lost, because it did not document underperformance adequately.
This article sets out what Australian law requires of employers managing underperformance and how to document a record that withstands scrutiny.
Who Can Bring a Claim?
Most private-sector employers are in the national system under the Fair Work Act 2009 (Cth) (FW Act), where claims are heard by the Fair Work Commission (FWC).
In the national system, an employee may claim unfair dismissal if they have completed six months’ employment (12 months if the employer has fewer than 15 employees), are covered by an award or agreement or earn less than $190,100 (the threshold for dismissals from 1 July 2026), and apply within 21 days: ss 23, 382–383, 394(2) FW Act. A probation period does not shorten the statutory period allowed to file an unfair dismissal claim.
What Does the Fair Work Commission Need for a Dismissal to be Fair
A dismissal is unfair if it was harsh, unjust or unreasonable: s 385 FW Act. Section 387 lists what the FWC must weigh. For underperformance, the FWC asks five key questions dominate:
- Was there a valid reason?
- Was the employee told of it?
- Could they respond?
- Was a support person allowed?
- And were they warned about the unsatisfactory performance before dismissal?
A valid reason is one that is sound, defensible or well founded: Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373 (Northrop J). Even if an employee is doing their best, an employee is entitled to dismiss them if their work at full capacity still doesn’t meet the business’ reasonable needs: Crozier v Palazzo Corporation Pty Ltd t/as Noble Park Storage and Transport (Australian Industrial Relations Commission).
However, the sound reason for dismissal must be provable on the facts. In Crozier the Full Bench held that the employee must be told the reason and given the chance to respond before the decision to dismiss is made; telling them afterwards is shutting the stable door after the horse has bolted: [64]–[75]. An employee who merely senses the employer’s unhappiness has not been warned.
Five Steps to Document Underperformance Properly
Underperformance can be documented properly by doing the following 5 steps:
- Set an objective standard by which performance is assessed by.
Start with what the employee failed to meet. The standard should be written, measurable, reasonable and applied to comparable employees. “Not a team player” is an opinion; “six of ten reports submitted late” is evidence. Before proceeding, ask whether performance is truly the issue: if the employee has recently complained, taken leave or disclosed a health condition, take advice first.
2. Keep a written record and raise concerns as early as possible.
Have a private conversation, then confirm it by email: the concern, the expectation and when you will review. Keep a file note of who attended and how the employee responded.
3. Meet formally and on the record.
Invite the employee in writing, state the concerns and offer a support person (s 387(d) FW Act). Put specific examples to them, record their answers in their own words, and decide nothing in the meeting.
4. Create a clear performance plan.
Agree a written improvement plan with measurable standards, a realistic timeframe, the training you will provide, review dates and a clear statement that continued failure may put the job at risk. Then deliver the support and record each review. Evidence of genuine help can be decisive: in Crozier the employer succeeded in part because it had accompanied the employee on client visits and suggested leads: [61].
5. Warn the underperforming employee clearly and specifically.
If improvement is insufficient, give a dated written warning that says what is unsatisfactory, what must change by when, and that dismissal may follow. The Act prescribes no number of warnings; it asks whether the employee was warned: s 387(e).
6. Give the employee a chance to explain their situation.
Tell the employee in writing that dismissal is under consideration and why, invite a response and a support person, and genuinely consider what they say, including alternatives. The termination letter should rely only on reasons already put to them.
What Does a Persuasive Documentation of Underperformance Entail
Keeping a strong record of underperformance looks like:
- Make notes the same day, while detail is fresh.
- Record the employee’s side and invite corrections.
- Keep emails, messages and system data in one place, and delete nothing once a dispute is foreseeable.
- Never backdate; add a dated addendum instead.
- Finally, documenting who made the decision and why, because that person’s account will be tested against the file.
Four Mistakes that Employers Commonly Make that Employers Should Avoid
Employers often make 4 mistakes with documenting underperformance
- The first is deciding first and consulting later, as employees must have a chance to explain their situation, and that explanation must be considered.
- The second is a warning that never says the job is at risk or leaves no time to improve. For example, in Miller v Urban Pedaler [2018] FWCFB 4166, a Full Bench held that a small business had not complied with the Small Business Fair Dismissal Code where the employee was told his employment was at risk only in a warning letter and was then given four days.
- The third is relabelling a performance problem as misconduct to avoid process; summary dismissal requires serious misconduct, as defined in the Fair Work Regulations 2009 (Cth) reg 1.07, not poor performance.
- The fourth is ignoring the employee’s circumstances: opening a process days after a complaint, a leave request or a health disclosure invites an adverse-action claim.
Risks Beyond Unfair Dismissal
An employee who is too new or too well paid for an unfair dismissal claim can still allege adverse action. An employer must not dismiss someone because they exercised a workplace right or because of a protected attribute such as disability, pregnancy or carer’s responsibilities: ss 340–341, 351 FW Act. Once the employee establishes the right or attribute, the employer must prove it was not a reason for the dismissal: s 361. The decision-maker’s honest evidence about their reasons can discharge that burden, but it will be measured against the paper trail: Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500, 517 [45] (French CJ and Crennan J), 542 [127] (Gummow and Hayne JJ). Applications must be lodged within 21 days: s 366(1)(a) FW Act.
A well-run process also answers other claims. Reasonable management action carried out in a reasonable manner is not bullying (s 789FD(2)), and the FWC identifies starting a performance improvement plan as an example of it. In New South Wales, a psychological injury claim fails if the injury was wholly or predominantly caused by reasonable action on performance appraisal or discipline, and the employer must prove that: Workers Compensation Act 1987 (NSW) s 11A(1).
Small Businesses
Employers with fewer than 15 employees may rely on the Small Business Fair Dismissal Code: s 388 FW Act. Outside serious misconduct, the Code requires a valid reason, a warning that the employee is at risk, a chance to respond and a reasonable chance to improve. It does not require multiple warnings or that a warning be in writing, but the employer must be able to prove one was given, so a written warning remains the safer course. A dismissal that does not comply with the Code is assessed under s 387.
What to Do When an Unfair Dismissal Claim Arrives
Once a claim arrives, employers should act immediately. The 21-day limit is strict, and the FWC will usually conciliate first. Preserve every record, build a dated chronology and make sure the decision-maker’s account matches the documents. Reinstatement is an emphasised remedy, and compensation is capped at the lesser of 26 weeks’ remuneration and half the high-income threshold: s 392(5)–(6). For dismissals from 1 July 2026 the cap is $95,050.
Conclusion
To conclude, a fair process, properly recorded, is an employer’s best protection. It also makes disputes less likely in the first place, because employees can see a genuine attempt to help them succeed.
How can OpenLegal help?
OpenLegal can assist employers with unfair dismissal disputes. If you are concerned about such an employment dispute, OpenLegal offers a free 15-minute consultation to discuss your matter and how we may be able to assist.
Visit openlegal.com.au to learn more.
This article is not intended to be legal advice and is general information only.
By Intern Abrar.
